In the increasingly complex wealth management market, major industry players are stepping up to the plate. Charles Schwab & Co., Inc. and BNY Mellon Pershing, two leading names in the sector, have recently made significant advances in direct indexing services, aiming to simplify processes for Registered Investment Advisors (RIAs).
On June 8, 2023, Charles Schwab announced a range of enhancements to Schwab Personalized Indexing™, its proprietary direct indexing solution. These advancements include a digital interface designed to streamline the client onboarding process for RIAs and allow for the more efficient opening and funding of new accounts across multiple managed account platforms.
"We know that independent advisors are increasingly looking for ways to personalize the investing experience for their clients,” said Divya Krishnan, Director, Schwab Product Management. “We are excited to bring advisors a more efficient, modern experience for enrolling their clients in Schwab Personalized Indexing, alongside powerful new capabilities for tailoring portfolios to personal client preferences or situations.”
Additionally, a newly introduced digital dashboard provides clear insights into account performance, showcasing total realized gains and losses driven by Schwab's proprietary tax-loss harvesting algorithms.
Not far behind, BNY Mellon Pershing announced its foray into the direct indexing arena at INSITE'23, introducing their offering, BNY Mellon Precision Direct Indexing service. This debut product harnesses Pershing's existing clearing and custody services, providing financial advisors a powerful tool for tax-loss harvesting. This is powered by Pershing X's innovative automated tax optimizer.
The new service, tailored to fit both financial and personal client goals, benefits from Mellon's institutional expertise in portfolio management and indexing. The announcement of this product follows Pershing's acquisition of Optimal Asset Management, a direct indexing solutions provider, around a year and a half ago.
These strides highlight the rising importance of direct indexing in the evolution of the financial industry.
However, there is a considerable knowledge gap, as illustrated by a concerning statistic revealed in The Wealth Advisor’s survey last year: an alarming 70% of financial advisors profess to have little to no knowledge about direct indexing.
Scott Martin, Wealth Advisor managing editor, observes, “With so many big players like Morningstar and Schwab flooding the zone with messaging, it’s natural that our people are now aware that direct indexing is happening. But few have successfully connected the dots to figure out what it is and why it matters.”
Recognizing this knowledge gap and the burgeoning interest in direct indexing services,
The Wealth Advisor is set to launch America's first-ever Direct Indexing Buyer’s Guide in mid-July.
The upcoming Direct Indexing Buyer’s Guide aims to fill this gap, providing much-needed practical guidance to financial advisors across the nation. Lauren Rosenfarb, Associate Publisher of The Wealth Advisor, sees this as a game-changer for the industry. She notes, "We're not only empowering financial advisors with the knowledge they need, but we're also providing direct indexing providers with a platform to reach out to a vast network of advisors eager to learn."
In addition, The Wealth Advisor offers a unique sponsorship program. This provides direct indexing providers an opportunity to present their services and interact with a potential audience of 330,000 Registered Investment Advisors (RIAs) and Broker-Dealer (BD) advisors.
Sponsors can avail themselves of a range of benefits including a custom firm profile, digital dashboards,
CRM-integrated lead follow-ups, targeted earned media, and immediate feedback, all aimed at increasing engagement, visibility, and efficient communication with potential clients.
For more information about the sponsorship upcoming Direct Indexing Buyer's Guide and sponsorship opportunities, visit https://showcases.thewealthadvisor.com.
